Not a huge fan of this. Taking money to evaluate extensions means people or teams with less resources aren't going to be able to reach as many people as before. And putting a caution label on extensions that Mozilla hasn't approved is just as bad. So even when smaller teams get their extension in front of people, Mozilla is going to warn them off. Extensions are the biggest thing Mozilla has going for them in the browser space. Narrowing their usefulness is just going to annoy large parts of their remaining userbase.
Can't say that I'm a fan of this idea. I think a Flagship Linux would just overshadow all other distributions (see Chrome vs other web browsers, Mastodon vs other fediverse servers). Nothing is stopping OEMs and developers from picking a distro and specializing in it. That's what Dell did with the XPS laptops. They chose Ubuntu, Pine went with Manjaro for the PineBooks, System76 ships with their own PopOS. Then a non-technical user gets to choose which one they prefer, instead of being stuck to Flagship Linux.